Biden’s signature climate law, the Inflation Reduction Act, passed on a party line vote by the narrowest of margins — 50 Democratic votes in the Senate (with Vice President Kamala Harris breaking the tie) and 220 in the House of Representatives. With tense tax negotiations looming next year, it will now have to survive a 53-Republican Senate and a majority-Republican House. And that means that if they want to save the IRA from being gutted, the beneficiaries of its tax credits for the production of and investment in non-carbon-emitting fuels, advanced manufacturing, hydrogen, carbon capture, and the rest will have to learn to speak Republican.
The companies that benefit from the bill are “going to keep engaging policy makers on both sides of the aisle, but particularly now Republicans,” Jason Clark, the former chief strategy officer of the American Clean Power Association and head of energy policy consulting firm Power Brief, told me.
“There’s been a very thoughtful, very considerate effort to do just that — to make sure that they know how to engage with Republicans in a way that is authentic, that isn’t just lip service,” Clark said. The industry should avoid, “Oh, my goodness, we want to be buddies all of a sudden because you’re in power.”
One way to do that is by making sure you have Republicans making your case. The American Clean Power Association has former Trump administration and American Petroleum Institute staffers on its policy and federal affairs teams, for example.
“If you’re a Republican with energy expertise, yeah, your stock is fairly high right now,” Colin Hayes, a former senior staffer on the Senate Committee on Energy and Natural Resources under Alaska Republican Lisa Murkowski and founding partner of the bipartisan lobbying firm Lot Sixteen, which represents a number of green energy firms and trade groups, told me in an email. “We’ve been getting a lot of calls.”
But it’s not just hiring the right people — the industry also needs to be “learning to engage with members of Congress as constituents,” Emily Domenech, a former staffer for House Speakers Kevin McCarthy and Mike Johnson who is now a senior vice president at Boundary Stone, a firm founded by veterans of the Obama Department of Energy, told me.
“In the past, clean energy hasn’t focused on getting to know those representatives. When they’ve had ideas for bills or policies, they went to Democrats. They haven’t built a lot of personal relationships with members of Congress on the other side of the aisle,” Domenech said.
Her advice? “Go out there and build relationships and do the shoe leather lobbying engagement that every other company is doing.”
And what kind of arguments might would-be buddy-buddy clean energy companies make to those Republican lawmakers?
Along with some changes in vocabulary, their strategy will likely involve a combination of appeals to business and investment certainty, job creation in Republican districts, and emphasizing the regional benefits of certain incentives, like tax credits for wind energy and carbon capture in the Great Plains or manufacturing in the South.
That’s because the projects themselves have largely ended up in Republican-represented and -controlled areas, which tend to have the open space and business-friendly regulatory climate clean energy companies appreciate, even when they’re run by Democrats.
Lobbyist Scott Segal, who represents a number of energy companies and other firms affected by the Inflation Reduction Act in his capacity as a leader of the government relations team at Bracewell, told me in an email that “the value proposition for a balanced energy portfolio contains many elements already of great concern to Republican leaders.”
“Significant capital has already been deployed based on clean energy incentives,” he said. “To change these incentives in midstream would create business uncertainty — in effect, it would increase taxes on these projects. Outcomes like this run counter to long-standing Republican principles.”
The industry is already starting to get the hang of the lingo. Advanced Energy United, a clean energy trade group, was early congratulating Donald Trump on his election victory. “When we talk to Republican lawmakers,” the group’s managing director, Harrison Godfrey, told me, the message is, “let’s not fundamentally change course. Investment decisions take years. We build industries with certainty.”
As several lobbyists and strategists I spoke to pointed out, the Inflation Reduction Act did not invent clean energy tax credits, and this won’t be the first battle to preserve them. Tax incentives for non-carbon-emitting “alternative” energy have been a part of the policy landscape since the late 1970s. Wind energy and biofuels have won especially ardent support from some very powerful Republicans, namely those in the Corn Belt, and particularly Iowa Senator Chuck Grassley, who has for decades fought for extending the production tax credit for wind.
“These are credits and industries that didn’t spring up yesterday and have literally been in existence for decades,” Godfrey told me.
The best example of an alternative energy credit that embedded itself within the Republican Party policy playbook is one many environmentalists face with some degree of chagrin: biofuels, Domenech told me.
The Renewable Fuel Standard, established by the Energy Policy Act in 2005 amid concerns about energy security, has become a bonanza for states like Iowa, which grows much of the corn that is then processed into ethanol fuel according to standards set by the Environmental Protection Agency.
Lawmakers’ attachment to the program is so strong that it has at times run a fissure through the Republican Party. Though Trump’s first EPA administrator, Scott Pruitt, was one of the administration’s chief villains in the eyes of the environmental movement, he also became a punching bag for Republican lawmakers, including Grassley, who tangled with Pruitt in 2017 over blending targets for biofuels and the waivers given to refiners to avoid buying credits to comply with the program. (When Pruitt resigned in a cloud of scandal the following year, Grassley took a rhetorical victory lap.)
Capitol Hill has maintained biofuels’ first-among-equals status ever since. The industry’s sway with lawmakers of both parties in the Midwest is why Republicans are joining with Democrats to introduce bills to extend the 45Z tax credit for so-called clean fuels “at a time when a lot of other IRA credits could be on the chopping block,” Domenech said.
Similar alliances could form around other parts of the bill, especially those with well-defined regional impacts, Domenech said. Doug Burgum, Trump’s pick for Secretary of the Interior and the head of his newly-formed National Energy Council, has backed a massive carbon capture and pipeline project in his home state of North Dakota, which some analysts have said could get billions of dollars in tax credits, Geothermal development could also maintain the support of lawmakers in the Mountain West, where most of the country’s geothermal resource is located, while incoming Senate Environment and Public Works chair Shelly Moore Capito is one of the chamber’s biggest advocates for nuclear power.
“If you ask Republicans to be for or against the IRA as a whole, they’ll be against it,” Domenech told me, “But Republicans think about energy as a regional issue. So instead of forcing this one size fits all approach, IRA advocates would be smart to give people room to support only the policies that make the most sense for their state or region.”
Courtesy of Harbinger